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We received so many calls from my post on Friday asking me to write more on the Burden of Proof that I decided to write a supplement. See The Burden of Proof Must be Changed: BofA Slammed Again
IT MAKES NO SENSE
“Your Honor this is a simple foreclosure on an ordinary mortgage.” Those words, uttered by most foreclosure attorneys are very misleading. Because the attorneys don’t have the information I have, the attorney might actually think the words he or she is speaking are true. But they are not true in most cases.
- If this was an ordinary loan with an ordinary loan closing why did the banks engage in fraudulent behavior in foreclosure cases — robo-signing, forgery, fabrication and even foreclosing on loans that were neither delinquent nor properly declared in default?
- If it was so ordinary why are the trial and appellate courts dealing with the issue of jurisdictional standing — because the owner of the loan is in doubt, to say the least?
As for securitization they are right — if it was done right. If you start with the proposition that the intent was for the brokers on Wall Street to create residential loans and give their clients a slightly higher yield from a portfolio of loans than the other bonds the investors were buying, and that ordinary underwriting practices had been employed in approving loans, then
- why are the Banks so reluctant to allege and prove the identity of the lender?
- Why have so many studies concluded that the foreclosers are mostly “strangers” to the transaction (San Francisco and Baltimore Study) or that at least half the loan documents were destroyed or lost?
- Why would a lender or purchaser of loans destroy cash equivalent notes unless they had something to hide?
- Why do they employ professional “testifiers” instead of actual employees or officers of the creditors?
- Why are so many foreclosures failing because they failed to prove their case (a rising number with each passing month)?
None of it makes sense. These banks have been dealing with paper instruments for hundreds of years. The plan is laid out in the PSA.
- Why were the loan settlement documents not delivered to the Depository for the alleged REMIC trust? Why is there no evidence of the Trust actually buying the loan within the cutoff period in the PSA?
- What were the brokers doing with the investors money while the investors thought the money had gone to the trust in exchange for the mortgage bonds issued and sold by the trust?
- What were the brokers doing with the closing paperwork after using the investor’s money, without disclosure to anyone, to either buy or originate loans without specifically and expressly protecting the bond buyers in written instruments that were properly and timely recorded?
I submit that there are no GOOD reasons or GOOD answers to those questions. I submit that if you start with the premise that the brokers started with the intent to steal the money and steal the loans, then everything DOES make sense.
- It makes sense that the loans were nearly all table-funded which is predatory per se according to Reg Z. But it doesn’t make sense if the brokers wanted clean loans with total transparency as required by law. It makes sense that they were concealing the actual source of funds (the investors directly instead of through the REMIC trust). And it makes sense that the Wall Street brokers and the web they spun of multiple layers of multiple companies were collecting and keeping undisclosed compensation that was largely an instant loss to the investors.
- It makes sense that the money was not deposited into a Trust account where a real trustee would have control over the funds and make sure that the terms of the trust were followed. If they had given the money to the trust, then the brokers would not have been able to play with that money as if it were their own.
- It makes sense that the investors’ money was used directly, instead of the coming from the trust because if it came directly from a trustee for the trust, then the trust would have had to get the settlement documents deposited with the depository and the required documents for instant ownership of the loan for which the investors’ money was used. By using the investors money under the illusion of a REMIC trust it makes it appear as though a trust is involved when in fact it is the broker who is controlling the transaction, not disclosing to the investors the real nature of the loans that were being approved, and leaving the buyers of those bogus mortgage bonds either without any disclosure to alert them that something was wrong or barred from finding out because of restrictions on inquiries contained in the PSA.
- And if makes sense that they used multiple layers of nominees without the slightest actual interest or risk in the loan to divert ownership of the loan away from the investors to the broker’s trading desk. By diverting the transaction away from the Trust and the Trust Beneficiaries they were able to create the illusion of a sale of the actual loan with an interest rate of 9% as though it was a 5% loan. That makes sense because the brokers were able to claim a “profit” on that Sale” — a 5% loan sells at twenty times earnings. So the broker sold the loan on its proprietary trading desk for nearly twice the loan amount — bequeathing an instant 50%-70% loss to the investors who thought their money was going through a carefully monitored trustee process and scrutiny.
- And it makes sense that they kept paying the investors even though the loan portfolio was collapsing, reporting loans as performing when the borrowers were not paying. If they didn’t do that — with a reserve created out of the investors money — then bond buyers would stop buying.
- And it makes sense that they would seek foreclosure as their first goal because that is the only way to create the illusion of clearing title. If they don’t foreclose as many loans as possible, the whole plan blows up because in a workout of the loan terms the brokers would be required to account for the profits and compensation and losses attributable to their plan. They would be required to refund or repurchase all the crazy loans they made that were made to fail.
- It makes sense that the brokers, controlling the servicers, would engage in a policy of luring the borrowers into “default” by stating that that the borrower would get a modification only if they are at least 3 months behind on their payments. If they didn’t engage in policies and practices designed to cause foreclosures to be filed, then their story about the crisis being related to loan defaults,falls apart. It would become obvious that the crisis occurred because the brokers took 20%-120% out the money flow created by investments from bond buyers.
- It makes sense that they don’t have a designated person at trial or can actually testify to each step in each transaction and whether the trust exists and what actual figures are shown on the books of account for the real creditors — the bond purchasers — as to the existence of a default and the principal balance due.
I guess I could go on forever. But you get the point. Start with the premise that the brokers set out on an illegal enterprise and everything falls into place. Start with premise that they were just doing their job according to law, and everything falls apart and MAKES NO SENSE.
Filed under: AMGAR, CORRUPTION, discovery, escrow agent, Eviction, evidence, expert witness, foreclosure, foreclosure defenses, foreclosure mill, GTC | Honor, investment banking, Investor, MBS TRUSTEE, MODIFICATION, Mortgage, Motions, originator, Pleading, securities fraud, Servicer, STATUTES, Title, TRUST BENEFICIARIES, trustee